Weak Substitution and no right of termination

[icarus]

I'm reviewing my new contract and there are a couple of clauses that make me very nervous about IR35:

1. "The Consultant: [My name] or any other consultant as agreed in writing by [Agency]"

The agency say that this is a satisfactory substitution clause, but it looks a bit weak to me.

2. "The Supplier does not have the right to terminate this agreement"

Wow - even an ordinary employee has the right to quit their job. I've never seen a clause like this before.

My accountant calls it "borderline". Anyone have any thoughts?

[pmeswani]

I'm reviewing my new contract and there are a couple of clauses that make me very nervous about IR35:

1. "The Consultant: [My name] or any other consultant as agreed in writing by [Agency]"

The agency say that this is a satisfactory substitution clause, but it looks a bit weak to me.

2. "The Supplier does not have the right to terminate this agreement"

Wow - even an ordinary employee has the right to quit their job. I've never seen a clause like this before.

My accountant calls it "borderline". Anyone have any thoughts?

Don't trust your accountant to give you an IR35 review, unless they also are IR35 specialists. Get it reviewed by an IR35 specialist. Without seeing your contract in its entirity, I can't comment on whether your contract is IR35 friendly or not.

But to address the points you have raised, it is not unusual for an agency to approve your substitute prior to them going on-site... remember, they have their own best interests at heart here (i.e. commisseion from the contract placement). To have a non-supplier-termination clause in a contract is not unusual. If there is a clause in the contract that allows the agency to terminate the contract, then all you need to do is to pick up the dog and bone and ask the agency to terminate. Give them a reason to end your contract.

[malvolio]

1, Add the phrase "such permission not to eb unreasonably withheld" to your RoS clause. As it stands it's too fettered to be of any use.

2. This is a good thing. You are not an employee, you have no right to walk away befoe the job is finished (or your contract ends). Thinking that you can compare your situation to an employee's will only lead to grief. Anyway, ever heard of MOO? A notice period means you can be paid when there is no work for you to do. Bad idea...

[icarus]

To have a non-supplier-termination clause in a contract is not unusual. If there is a clause in the contract that allows the agency to terminate the contract, then all you need to do is to pick up the dog and bone and ask the agency to terminate. Give them a reason to end your contract.

Thanks for your reply. Does this mean that "The Supplier does not have the right to terminate this agreement" is acceptable as long as there is a clause like "the Supplier has the right to ask the agency to terminate"? Doesn't the contract need to be clear that I can somehow decide to quit? Otherwise it looks like total control of my company by the agency.

[malvolio]

Thanks for your reply. Does this mean that "The Supplier does not have the right to terminate this agreement" is acceptable as long as there is a clause like "the Supplier has the right to ask the agency to terminate"? Doesn't the contract need to be clear that I can somehow decide to quit? Otherwise it looks like total control of my company by the agency.

Nonsense. Look at it form the client's viewpoint. He's paying you to deliver a known piece of work. How delighted would he be if you wander off halfway through? Why should he make it easy for you to do so? Why would the agency voluntarily help you terminte a live contract that's earning them money? (hint: agents absolutely hate contractors who bail part way through a contract). If you absolutely have to get out early (it happens) then first find someone to do the work for you, that's what your RoS clause is for.

You want to be a contractor, behave like one.

[icarus]

[QUOTE=malvolio;894129]You want to be a contractor, behave like one.[QUOTE]

I just want an IR35-compliant contract so I can get to work. All my other contracts have had notice periods and my accountant said that notice periods were the norm. If a No Termination clause makes my contract IR35 stronger then I say bring it on!

Thanks for your advice.

[pmeswani]

You want to be a contractor, behave like one.

I just want an IR35-compliant contract so I can get to work. All my other contracts have had notice periods and my accountant said that notice periods were the norm. If a No Termination clause makes my contract IR35 stronger then I say bring it on!

Thanks for your advice.

A non-termination clause is not an IR35 pointer (own it's own). It can be seen as you are being in control of the client, however, what the rest of your contract says will be the deciding factor. Get your contract reviewed by the likes of Abbey Tax or another IR35 Contract specialists.

[pmeswani]

Nonsense. Look at it form the client's viewpoint. He's paying you to deliver a known piece of work. How delighted would he be if you wander off halfway through? Why should he make it easy for you to do so? Why would the agency voluntarily help you terminte a live contract that's earning them money? (hint: agents absolutely hate contractors who bail part way through a contract). If you absolutely have to get out early (it happens) then first find someone to do the work for you, that's what your RoS clause is for.

You want to be a contractor, behave like one.

Agreed. You can't call up the agent and say "Terminate my contract because I don't want to work here any more". If there is a "genuine" reason, like a death in the family, or an illness that is preventing you from finishing the work, then that would be reasonable grounds for an early termination. It's not a good practice to follow, but can be used if necessary. It may burn a few bridges....so don't use it all the time.

[nomadd]

I'm reviewing my new contract and there are a couple of clauses that make me very nervous about IR35:

1. "The Consultant: [My name] or any other consultant as agreed in writing by [Agency]"

The agency say that this is a satisfactory substitution clause, but it looks a bit weak to me.

2. "The Supplier does not have the right to terminate this agreement"

Wow - even an ordinary employee has the right to quit their job. I've never seen a clause like this before.

My accountant calls it "borderline". Anyone have any thoughts?

Point 1: Get it changed so your name isn't in it.

Point 2: I'll go against the flow and say I always, always *insist* on even-handed notice periods; usually 4 weeks either way. I never accept contracts with no notice clauses, having had a couple of "nightmare" contracts in the past. The master-servant implications of one-sided clauses also bother me as regards IR35. But, as others have said, you can read it BOTH ways, and this issue on it's own is not enough to determine IR35 status.

Nomadd

[malvolio]

I'll go against the flow and say I always, always *insist* on even-handed notice periods

Your decision. Many qualified experts would appear to disagree...